Are euro-bonds safe investments?It is commonly agreed that (euro)bonds are safe investments. The quality of a eurobond depends on the solvency of the issuer. This solvency is closely monitored by specialized rating agencies such as Standard & Poor's and Moody's. These agencies provide an assessment ("a rating") regarding the solvency of the issuer and, consequently, the safety of the bond.
What is the rating of a bond?The issuer's quality is often expressed through its "rating," which provides an idea of its solvency. This raises the question: How can the bondholder (the investor) be sure that the issuer will fulfill all its obligations? In addition to periodic interest payments, the issuer must be capable of repaying the nominal amount of the bond at maturity.There is more than one "rating agency" that pursues the same objective: assessing the issuer's solvency in the bond market. The most well-known rating agencies are Standard & Poor's and Moody's.After conducting a thorough analysis of the issuers, these agencies assign a "credit rating" that indicates the solvency of these issuers.
Note: One must always pay attention to the ratings of bonds when comparing yields.
